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Eli Lilly Scores with Necitumumab

Eli Lilly and Company (LLY) received a boost recently with its phase III oncology candidate, necitumumab, achieving the primary endpoint in a study (:SQUIRE) conducted in patients with stage IV metastatic squamous non-small cell lung cancer (:NSCLC). Shares were up 2.6% on the news.

Eli Lilly intends to present these results at a medical meeting next year and is looking to file for regulatory approval by the end of 2014. The company has full global development and commercialization rights to necitumumab. Earlier, Eli Lilly had a collaboration with Bristol-Myers Squibb (BMY) for necitumumab in North America and Japan - however, Bristol-Myers terminated the collaboration in late 2012.

Our Take

The approval of necitumumab would be a major positive for Eli Lilly – in its press release, Eli Lilly mentioned that non-small cell lung cancer accounts for 85% of all lung cancer cases. About 30% of these patients suffer from squamous cell cancer.

However, we remain concerned about the occurrence of thromboembolism in the study. We remind investors that in early 2011, enrolment in another phase III study on necitumumab was stopped due to safety concerns related to thromboembolism in new or recently enrolled patients.

Eli Lilly currently carries a Zacks Rank #3 (Hold). The biggest near-term challenge for Eli Lilly will be to replace the revenues lost due to the Zyprexa genericization. The generic threat will continue to pose challenges for Eli Lilly with Cymbalta slated to lose patent protection in late 2013 and Evista in 2014. On the other hand, the Animal Health business and the diabetes franchise should provide some downside support.